Unit 1 Sole proprietorship (рассказать наизусть – 4 балла)

Before starting your business you have to choose the type of proprietorship in which you will own it. You should know that any business should be privately owned in three main forms. These forms are: the sole proprietorship, the partnership and the corporation.

The sole proprietorship. The sole proprietorship is the simplest organizational form. There is one owner who takes all profit after paying income taxes, and who is responsible for all business debts. He or she can make decisions without consulting anyone.

The strength of this form is in the direct personal interest of the proprietor in the efficiency of his business.

The great disadvantage of the sole proprietorship is that the proprietor is personally responsible for the debts of his firm and his liability is unlimited. Another disadvantage of this form is the strict limitation of its ability to acquire capital for expansion.

One-person business is widely used in farming, retailing, building, repair work and personal services such as hair dressing, beauty shops and the like.

Active vocabulary (выучить – 1 балл)

To choose – выбирать

proprietorship – собственность

to own – владеть

sole proprietorship – частная собственность

partnership – партнерство

corporation – корпорация

profit – прибыль

income tax – налог с доходов

debt – долг

strength – сила

proprietor – собственник

liability – ответственность

advantage – преимущество

disadvantage – недостаток

ability – способность

to acquire – приобретать

expansion – расширение

farming – фермерство

retailing – розничная торговля

repair work – ремонтные работы

Tasks

(перевести и выучить – 2 балла)

1 Translate into English using the expressions from the previous task.

Выбрать тип собственности

Организационная форма

Один владелец

Получать все прибыль

Оплата налогов с доходов

Отвечать за все долги

Принимать решения без консультации с кем-либо

Крупный недостаток

личный интерес собственника эффективность бизнеса

строгое ограничение

привлекать капитал для расширения

розничная торговля

ремонтные работы

2 Translate into English using the expressions from the previous tasks

(перевести письменно – 2 балла)

1 Я начинаю свое собственное дело и должен выбрать тип собственности.

2 Этот предприниматель владеет своим бизнесом в форме частной собственности.

3 Владелец компании платит все налоги с доходов.

4 Он также принимает все деловые решения и отвечает за все долги.

5 Предприниматель имеет прямой личный интерес в эффективности своего дела.

6 Владелец имеет неограниченную ответственность и может приобретать капитал для расширения.

7 Один собственник получает всю прибыль

8 Собственник принимает решение без консультации с кем-либо.

Reading (за перевод каждого текста в разделе reading – 1 балл, всего 12 текстов)

I

Forms of business ownership

Sole proprietorship: business that is owned, and usually managed by one person.

Example: most of the produce sellers at the central market.

Partnership: a business with two or more owners.

Example: some law firms, some accounting firms, etc.

General Partnership: has only General Partners (the General Partners are involved in the management of the firm but they have limited liability).

Limited Partnership: has Limited Partners (the Limited Partners have limited liability but they are not involved in the management of the firm) and at least one General Partner (the General Partners are involved in the management of the firm but they have unlimited liability).

Corporation: a business that is distinct legal entity (that is, that has an existence separate from its owners).

Closed Corporation: the stocks are held by a few people and are not available to the general public.

Example: M&M Mars Corporation.

Open Corporation: the stocks are sold to the general public.

Example: General Motors, Matsushita, Royal Dutch Shell.

Entrepreneur: one who starts a business, including its organization, management and risk-bearing.

Franchising: an arrangement for distributing goods or services that is agreed upon franchiser and franchisee.

Franchiser: the business that owns and sells others the right to distribute its goods and services.

Franchisee: the business that buys the right to distribute franchiser’s goods and services.

Example: many of Mc Donald’s stores, Hampton Inn (hotels).

II

Miscellaneous definitions

Acquisition: obtaining (in business it is when one company buys another).

Merger: combination of to or more firms to form one company.

Example: many banks in the USA are currently merging (such as Chemical and Chase Manhattan).

Subsidiary: subordinate or secondary (in business it is one company that is owned and controlled by another).

Example: Pizza Hut and Kentucky Fried Chicken are subsidiaries of PepsiCo.

Association: groups of people that are united for a purpose (in business it may be a professional association of educators, doctors, lawyers, accountants, etc).

Example: International Association of Translators and Interpreters, Institute of Managerial Accountants.

Cooperative: groups of people that are united for a principally economic purpose (it is basically a type of Association).

Example: agricultural cooperatives.

Joint Ventures: strategic alliance between two or more businesses.

Example: Fiat and Toillette car plant.

Non-profit Organization: an organization that does not profit for its owners.

Example: International Red Cross.

Miscellaneous abbreviations

Corp. (Corporation): a corporation.

Inc. (Incorporated): a corporation.

Ltd. (Limited): a corporation, it is used mainly in the UK and it gets its name from the fact that stockholders have only limited liability.

NGO (Non-government organization): usually used to describe Non-profit Organizations.

III

Steven Jobs and many other entrepreneurs have organized their companies as corporations. A corporation is one kind of business organization. Other kinds of business organizations are sole proprietorships and partnerships.

Sole proprietorship. A sole proprietorship is a business owned by one person. Sole proprietorships are the most numerous kind of business organization, but most are very small. The reason for their popularity is that they are the easiest and least costly to organize.

There are other advantages. Sole proprietors own all profit of their enterprises, and they are their “own bosses,” free to make whatever changes they please. They have minimal legal restrictions and do not have to pay the special taxes placed on corporations. Sole proprietors also have the opportunity to achieve success and recognition through their individual efforts.

There are also disadvantages. A very serious one is unlimited liability that each proprietor faces. All debts and all problems associated with the business belong to the owner. If a business fails, the owner must personally assume the debts. This could mean the loss of personal property such as automobiles, homes and savings. A second disadvantage of the sole proprietorship is that it has limited capital. The money that a proprietor can raise is limited by the amount of his or her savings and ability to borrow. Also when the owner dies, the business dies. Other disadvantages may include lack of opportunities for employees, limitations of size and growth lack of management resources.